What is a Reverse Merger with a Public Shell?

A Reverse Merger is a transaction where by the private company shareholders may gain control of a public company by merging it in with their private company.

The private company shareholders receive a substantial majority of the shares of the public company (normally 85% to 90% or more) and the control of the board of directors. The transaction can be accomplished in as little as two weeks, resulting in the private company becoming a public company. The transaction does not go through a review process with state and federal regulators because the public company has already completed the process. The transaction involves the private and shell company exchanging information on each other, negotiating the merger terms, and signing a share exchange agreement. At the closing the public shell company issues a substantial majority of its shares and the board control to the shareholders of the private company. The private company shareholders pay for the shell and contribute their private company shares to the shell company and the private company is now public.

Upon completion of the reverse merger...

the name of the shell company is usually changed to the name of the private company. If the shell company has a trading symbol it is changed to reflect the name change. An information statement, called an 8-K, must be filed within 4 days of the closing. The 8-K describes the newly combined company, stock issued, information of new officers and directors, a full description of the business, and financial statements audited to US GAAP standards. The 8-K must disclose the same type of information that it would be required to provide in registering a class of securities under the Securities Exchange Act of 1934. (See Sec Final Rule 33-8587, pdf file)

More Information on going public and reverse mergers

For more information on going public through a reverse merger and details on public shells currently available, please contact Go Public Institute at 713-301-8921

Go Public Disclaimer – Go Public Institute performs no underwriting function and acts solely on behalf of a client company in providing in-house financial advisory services. Although the consulting services of Go Public Institute may include general advice and consultation regarding general legal topics relating to the consulting services to be rendered, particularly with respect to areas of financial expertise of Go Public Institute, the services rendered by Go Public Institute do not include the rendition of professional legal services or any specific legal service, advice or consultation by any affiliate of Go Public Institute. Go Public Institute is not a Broker Dealer or registered with FINRA or the SEC. Go Public Institute will not accept broker fees or compensation for raising capital.


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